Polestar Automotive Holding UK Q2 Earnings Call Highlights

Key Points

• Record sales but lower outlook: Polestar sold 30,423 vehicles in the first half of 2026, supported by the Polestar 4 and expanded retail network, but cut its full-year forecast to low- to mid-single-digit volume growth amid pricing pressure and intensifying EV competition.
• U.S. regulatory setback: The company will not appeal the U.S. decision barring model-year 2027 vehicle sales, and expects about $130 million in restructuring-related adjustments, with potentially more costs to come.
• Losses narrowed while liquidity remained pressured: First-half revenue fell 4% to $1.36 billion, but operating and net losses improved year over year. Polestar ended June with $888 million in cash after $850 million of operating cash outflow, while shareholder debt conversions and reduced capital spending supported its funding position.

Polestar Automotive Holding UK NASDAQ: PSNY reported record first-half retail sales as it expanded its retailer-led sales model and increased contributions from its Polestar 4 model, though the electric-vehicle maker lowered its full-year volume outlook amid pricing pressure, regulatory challenges in the U.S. and broader market competition.

Chief Executive Officer Michael Lohscheller said Polestar recorded retail sales of 30,423 vehicles in the first half of 2026. The company now expects low- to mid-single-digit volume growth for the full year, revising its outlook to reflect market pressure and portfolio changes.

“Competition in the EV market continues to intensify,” Lohscheller said, citing significant pricing pressure, geopolitical developments and regulatory headwinds in the U.S.

U.S. Decision Prompts Restructuring Charges

A major factor affecting the company was a decision by the U.S. Department of Commerce to deny Polestar’s application for authorization under the Connected Vehicle Rule to sell vehicles in the U.S. from model year 2027 onward.

Lohscheller said Polestar will not appeal the decision. The company plans to continue selling model-year 2026 vehicles in the U.S. and will maintain its service and used-car businesses in the country, but it will not be able to sell model-year 2027 vehicles there.

Chief Financial Officer Jean-François Mady said the U.S. restructuring measures associated with the decision resulted in estimated material adjustments of $130 million. The effects were recognized through residual-value-guarantee costs in revenue, inventory adjustments in cost of sales, and organizational, investment and supplier costs in other operating expenses.

Mady cautioned that additional costs and charges could arise as Polestar completes further assessments of the decision’s effects.

First-Half Financial Results

Polestar reported first-half revenue of $1.36 billion, down 4% from a year earlier. Mady said the positive effects of volume, vehicle mix and foreign-exchange tailwinds were more than offset by pricing pressure, U.S. residual-value-guarantee costs and lower carbon-credit sales.

Carbon-credit sales included in revenue totaled $52 million during the first half, compared with $72 million a year earlier. The company also recorded $4 million of carbon-credit sales in other operating income, compared with $18 million in the prior-year period. Mady attributed the lower revenue from carbon credits primarily to greater competition in Europe, while citing U.S. regulatory changes as a principal reason for the decline in other operating income.

• Reported gross margin was negative 8%, compared with negative 49% in the year-earlier period, which included a $724 million net impairment expense.
• Adjusted gross margin was negative 9%.
• Operating loss narrowed 43% year over year to $629 million.
• Net loss narrowed 29% to $842 million.
• Adjusted EBITDA loss was $521 million.

Mady said operating results benefited from a vehicle mix shifting toward higher-margin models, led by the Polestar 4; favorable inventory valuation adjustments outside the U.S.; cost-discipline measures; lower headcount spending; and the absence of impairment expenses recorded in the first half of 2025.

Those improvements were partly offset by pricing pressure, lower carbon-credit sales, foreign-exchange effects, prior-year one-time gains and U.S. restructuring-related adjustments.

Second-quarter retail sales were nearly 17,300 vehicles, down 4% year over year. Quarterly revenue declined 8% to $727 million. Polestar posted a second-quarter net loss of $459 million, an improvement from a net loss of $1.03 billion a year earlier, primarily because no impairment expense was recognized in the latest period.

Retail Expansion and Product Launches

Polestar said its active-selling transformation has expanded its footprint to 235 sales points and 178 retail partners across 28 markets, representing a 39% year-over-year increase in the retail network. During the first half, the company opened 24 sales points and added 20 retailers, with most of the expansion occurring in Europe.

Europe represented 78% of retail volume, with the U.K., Germany and Southern Europe cited as particularly strong markets. South Korea led performance in Asia-Pacific. The U.S. represented 6% of first-half retail sales, down from 9% in the same period of 2025, as tariffs and regulatory changes affected the business.

The Polestar 4 coupé remained the company’s best-selling model and accounted for two-thirds of volume. Lohscheller said the newly opened order books for the Polestar 4 SUV could broaden the vehicle’s appeal by placing it in a larger mainstream SUV segment. More than 900 units are already en route from the company’s Busan, South Korea, factory, with customer deliveries expected to begin in the fourth quarter.

The company is also preparing for initial customer deliveries of its Polestar 5. Lohscheller described the model as a “halo car” intended to support the brand’s positioning, while indicating it will be less significant to total volume than the Polestar 4 variants and the successor to the Polestar 2.

Looking toward 2027, Lohscheller said the Polestar 4 SUV and Polestar 2 successor are expected to be the company’s principal volume drivers, as both address larger market segments. The Polestar 2 successor is expected to ramp during the second half of 2027.

Liquidity and Capital Structure

Polestar ended June with $888 million in cash, down from $1.16 billion at the end of 2025. The company said operating cash outflow was $850 million during the first half, while capital expenditures totaled $211 million.

During the period, Geely Sweden and Volvo Cars converted about $640 million of outstanding loans and accrued interest into equity. Volvo Cars also extended the maturity of its remaining $660 million shareholder loan to December 2031. Polestar said it remained in compliance with all covenants at the end of the second quarter.

Mady said Polestar raised $1.2 billion of equity over the past 15 months and renewed or increased $1.7 billion in banking facilities during the first half. He added that the company reduced capital-expenditure spending by one-third and expects a significant reduction in cash burn in the second half, while continuing to explore opportunities to improve its funding position.

About Polestar Automotive Holding UK (NASDAQ:PSNY)

Polestar Automotive Holding UK PLC NASDAQ: PSNY is an electric performance car company specializing in the design, development and manufacture of premium electric vehicles. Established as an offshoot of Volvo Car Group’s high-performance Polestar division, the company focuses on delivering a blend of Scandinavian design, advanced electric powertrains and cutting-edge connectivity features.

The roots of Polestar date back to 1996 when it operated as Volvo’s in-house tuning and motorsport arm.

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